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Caterpillar slips as higher costs dent margins at construction business

(Reuters) - Caterpillar Inc spooked investors for a second straight quarter as rising costs hit margins in its construction equipment business and tepid sales in the Asia Pacific region pointed to continuing subdued growth in China.

Shares of the company, considered a bellwether for economic activity whose results often influence global stock market sentiment, fell as much as 4 percent, overturning an initial rise due to overall results that were flattered by a tax gain.

The latest results come after the world's largest heavy duty equipment maker warned in the fourth quarter that construction activity in China could cool after two years of significant growth.

Chief Financial Officer Andrew Bonfield, however, said on Wednesday that the industry saw stronger-than-expected activity in China ahead of the Chinese New Year, though full-year sales would remain flat for Caterpillar in the region.